Digital payments in India could rise to $1 trillion over the next five years, as global technology giants pushed infrastructure as aggregators for retail payments, said Credit Suisse in a note on Monday.
“In just four months of launching its payments app, Google is already processing the same number of digital transactions as Axis Bank (fourth highest among banks) and has resulted in Unified Payments Interface (UPI) transactions increasing about eight times,” wrote Credit Suisse analysts Ashish Gupta, Kush Shah, and Sunil Tirumalai.
The report said with WhatsApp planning to integrate a payments button in its app within a few days, digital payments were set to explode, and could become a $1 trillion market over the next five years. WhatsApp has 230 million daily users on an average and is the most popular mobile app in India.
Currently, for payments, 70 per cent in value and 90 per cent of the volume happen through cash in India. Digital currency, according to Credit Suisse, is estimated at $200 billion. The country could emulate the path taken by Chinese consumers; the country is undergoing a large digital transformation in payments. In China, mobile payments already exceed $5 trillion.
India has already started showing early signs in voracious consumption of data.
“Data usage for 300 million Indian smartphone users has jumped to 5-10 GB per month from 1GB last year. The surge in digital payments in China was triggered by its integration into e-commerce and social platforms, which now have a 95 per cent market share. Payment integration into popular apps in India will drive the digital payments market to $1 trillion over the next five years,” Credit Suisse said.
“With 800 million bank accounts now linked, the bulk is mobile-transaction ready. The top four banks — SBI, HDFC Bank, ICICI, and Axis — together account for over a third of the banking system’s customer base, but drive 60-70 per cent of retail activity,” the report said.
“The tech aggregators would primarily look to tie up with these franchises. There is also no loss of customers (or their data) for the banks even as they transact on the platforms of these aggregators. Customer migration to digital will also help prune operating costs and create new lending opportunities,” it added.